Push for building inspection changes to help reduce conflict between buyers and sellers

PHOTO: Adele Charalambous was surprised to learn that certain defects in their newly purchased home were not required to be fixed by the former owner. (ABC News: Emily Piesse)

Adele Charalambous and her husband had been looking for a new home for two years when they made an offer on a 1930s character home in the Perth suburb of Nedlands.

In January, the pair moved in, despite a litany of defects having been picked up in the pre-purchase building inspection report they commissioned.

“It was a 36-page report, of which 27 pages detailed about 35 defects,” Ms Charalambous said.

All bar two of the defects — including problems with the roof and a tilted boundary fence — were not deemed to be structural, and were therefore not covered under the standard annexure issued by the Real Estate Institute of WA (REIWA).

While the sale proceeded, Ms Charalambous said the experience had been “a little confronting”.

“Our biggest learning out of this process was the fact that we weren’t clear — or … weren’t particularly well informed — in terms of what does a structural defect mean?”

PHOTO: It is hoped a pre-purchase building inspection report could alleviate conflict between buyers and sellers. (ABC News: Emily Piesse)

Definition of structural defect ‘narrow in scope’

Under the REIWA annexure, if a structural defect is detected, the seller of the property is obligated to either compensate the buyer or remedy the defects using a registered builder. But the definition of structural defect is narrow in scope, according to Elias Oostveen, a registered builder who operates building inspection company Home Integrity.

“People don’t understand. We deal with lawyers and doctors, really smart, professional people, but when it comes to building terminology, I think people just make up their own mind [about] what building and structure mean,” he said.

Defects that are not considered structural include sagging ceilings, leaking shower recesses, problems with the roof (other than the roof frame) and rising damp.

“A non-structural defect might be no heat shields to down lights,” he said. “If debris or insulation come into contact, it’s a huge fire hazard. We have to put it in the report … but people are very confused.”

That confusion has motivated Mr Oostveen to draft a new annexure, which allows buyers and sellers to specify what will be covered in the inspection.

“If they’ve come from a house that’s had a leaking roof or leaking shower … there’s a section where they can insert ‘we want the roof cover checked’,” he said. “There’s also a section for the seller to sign that, so if the seller doesn’t want to be liable for fixing the roof, they just cross that section out.”

Real estate agent Peter Robertson, who worked on the draft annexure with Mr Oostveen, said he believed the new document would help reduce conflict between buyers and sellers.

“It used to be caveat emptor, buyer beware. [That] doesn’t exist anymore, so my job as an agent is to make sure that we have a really good, really clear transaction where everybody understands what they’re getting and what they’re giving,” Mr Robertson said. “I would expect the industry will look at this and embrace it as a good idea.”

‘We want to make sure they’re protected’: REIWA

However, newly elected REIWA president Damian Collins said REIWA does not “see any need, as it currently stands, to change the annexure very much”.

“We’re open to amending our annexure, but obviously we’ll take the feedback of the [REIWA] members based on their feedback with the public,” he said. “The issue is, what’s a structural defect? You cannot define that definitively, and so we’re thinking that maybe the qualification level might need to be looked at.”

In Western Australia, there is no formal qualification or regulation defining who may be a building inspector, in contrast to other states. However, that may be about to change, with REIWA considering new rules to ensure inspections are performed by a qualified professional.

Mr Collins said the organisation was looking at several options, including inserting a clause in the standard annexure to allow inspections by registered builders only.

“When people are buying their biggest asset, we want to make sure that they’re protected and that the qualified people are making the assessments, whether something is structurally sound or not,” Mr Collins said.

PHOTO: Many buyers do not understand what is considered a structural defect and what is not. (ABC News: Emily Piese)

REIWA said it did not have a timeframe for voting on the changes, but planned to canvass its members in the months ahead. For Mr Oostveen, that decision is overdue.

“People are very surprised when I explain … that you don’t need to be licensed,” Mr Oostveen said.

“You don’t need to be registered, you don’t need to be accredited, anyone can do building inspections.”

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